Reflecting on NL Industries' (NYSE:NL) Share Price Returns Over The Last Three Years

While not a mind-blowing move, it is good to see that the NL Industries, Inc. (NYSE:NL) share price has gained 13% in the last three months. But over the last three years we've seen a quite serious decline. In that time, the share price dropped 68%. So it's good to see it climbing back up. Perhaps the company has turned over a new leaf.

Check out our latest analysis for NL Industries

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the three years that the share price fell, NL Industries' earnings per share (EPS) dropped by 40% each year. This fall in the EPS is worse than the 32% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into NL Industries' key metrics by checking this interactive graph of NL Industries's earnings, revenue and cash flow.

A Different Perspective

NL Industries provided a TSR of 22% over the year (including dividends). That's fairly close to the broader market return. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 9%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with NL Industries , and understanding them should be part of your investment process.

Of course NL Industries may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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